The Good And Bad In Chaotic eBook Pricing

from the ups-and-downs dept

For years we've discussed the ridiculousness of ebook pricing, where some publishers seem to think that sky high prices for ebooks (often higher than physical copies) makes sense, despite the lack of printing, packaging, shipping and inventory costs. And, of course, we won't even get into the question of the price fixing debacle. Art Brodsky recently wrote a fascinating piece over at Wired about how ebook pricing is an "abomination," because it's designed to price people out of reading. He points out that we should think more about ebooks like we think about apps, since that's a much more direct comparison than "books." And then he gets into a discussion of how publishers are going crazy with their library pricing:

Take the example of J.K. Rowling’s pseudonymous book, Cuckoo’s Calling. For the physical book, libraries would pay $14.40 from book distributor Baker & Taylor — close to the consumer price of $15.49 from Barnes & Noble and of $15.19 from Amazon. But even though the ebook will cost consumers $6.50 on Amazon and Barnes & Noble, libraries would pay $78 (through library ebook distributors Overdrive and 3M) for the same thing.

Somehow the “e” in ebooks changes the pricing game, and drastically. How else does one explain libraries paying a $0.79 to $1.09 difference for a physical book to paying a difference of $71.50 just because it’s the electronic version? It’s not like being digital makes a difference for when and how they can lend it out.

In another wrinkle: Random House jacked up its ebook prices to libraries 300 percent last year, and HarperCollins limits the number of check-outs per ebook. This means libraries have to lease another “copy” when they reach a certain threshold … as if the ebook had died or something. In fact, that’s the problem some authors have with ebooks — not just that they earn less money on them, but that “They never degrade. They are perpetual. That harms writers directly,” as historian and novelist David O. Stewart has observed.

As Brodsky notes, this whole situation is ridiculous, and it harms pretty much everyone. Also, it seems to be in direct contrast with others, even within those very same publishers, who realize that crazy high prices for ebooks are a really bad idea. You may recall Rob Reid, the author of the comic sci-fi novel Year Zero. If you don't remember, it's the story of a world in which aliens want to destroy the earth to avoid having to pay all the money in the universe for a prolonged bout of copyright infringement, thanks to their love of Earth music, which they listened to without realizing the copyright implications. Last year, we published an excerpt of the book along with a fun video conversation between Rob and myself.

This week, Rob has a really interesting blog post about how his publisher, Random House, (yes the same one mentioned above for jacking up its library rates) is running an experiment by offering the ebook for his novel at $0.99, and he rightly applauds this decision to embrace and experiment with prices like that, rather than screaming about how low prices "devalue" the book. After saying "hats off to Random House for testing out pricing tactics that some would view as kamikaze lunacy," he compares how publishers are willing to do this with how the record labels acted back when Rob ran one of the earliest online music services (which became Rhapsody):

For years, we pleaded with the major labels to at least experiment with selling downloads for 99¢ a song. We were always told that this would “devalue” music. As if the only way to properly honor that one Chumbawumba song (yes, it was that long ago…) was to charge $15.99 to get it glued to eleven other songs in a full-length CD. Wrong. What truly devalued music was requiring the downloading public to pirate it rather than purchase it for five long years.

He further notes that while some wish to blame "piracy" for the problems the industry faces, the real problem is the industry responding incorrectly to that new digital world:

A convenient fiction that still makes the rounds blames music’s gruesome decade on Napster-abetted piracy. This is like saying that the outsiders commonly called Barbarians caused Rome’s collapse. Rome conquered the Samnites, Carthage, Hellenist empires, and countless other well-oiled foes. But Rome ultimately fell because it reacted to the Barbarian threat in wholly self-destructive ways – not because the mere existence of Barbarians magically doomed history’s greatest empire.

So, indeed, it's great to see Random House willing to experiment with $1 ebooks -- and it could be quite a successful experiment. Last year, we wrote about how Paulo Coelho had tremendous success when his publisher, Harper Collins, agreed to sell his ebooks for $0.99 as well, leading to a massive jump in sales. This isn't a guarantee that people will pay that amount, obviously, or that such an experiment is a sure-fire success. But it is at least somewhat encouraging that these publishers are willing to experiment on that front. Now, if they weren't so damn afraid of those crazy "public libraries"....

When buying ebooks:

I will happily fork over $.99-2.99 for a book, either from an author I'm familiar with, or one I'm curious about and want to check to see if they're any good.(Worst case scenario, I wasted $3, and know to avoid that author in the future)

I will maybe be willing to pay the same price as a physical book($5-7ish), and I won't even consider it without a guarantee of quality, whether from a trial section, or from previous books of theirs.

Any higher than that(in the hardcover or more price range), and I'll only even think about picking up the ebook if I want to show some financial appreciation to the author for other(more sanely priced) books of theirs that I've enjoyed, or if it's a collection of books.

I don't buy hardback books because I don't think it's worth spending that much money on a book, why would I pay that much for a digital file?

And of course it goes without saying that DRM, no matter what the price range, is a complete sale-killer, I refuse to pay money for something that I don't actually own. I wouldn't accept terms and conditions that dictated what I could and could not do with a paperback book I bought, I'm certainly not going to accept them on the digital equivalent.

Here is the thing greater than $10 bucks and people get squeamish about doling out money any time soon it gets expensive, the secret here is to make the guy spend over and over and over again and in the process make him over spend without noticing it.

I know this is a machiavellic view of the process but is the only one I can see working.

People who buy that stuff are the ones that spend all their money without regard to other important things, they would spend it anyways, some have collection compulsions and will buy any different version that is made available to them.

You have to make ways they spend in total more than seventy eight bucks.

A rain collector, quarter muncher or whatever.

You have ebooks, you have animated novels(aka visual novels), bonus material, merchandise and so forth.

If you know how to edit HTML you already know everything there is to know about visual novels.

But that is the author, now how the author uses its base to make money out of the work of its own fans?

Create a place where fans can contribute and sell their own creations where you the author will take a little percentage off of that, they create for you and you get money without having to fucking work and everybody is happy.

Is there some sort of media management like the open source Razuna for book writing? some sort of software that creates ebooks, visual ebooks and others forms in one place?

...or keep all that frozen in time and try to force others to accept ridiculous prices without any perceived gain whatsoever and see how it goes.

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yes, have calibre on my 'puter, but have not messed with it much, yet... i will give that a shot, thanks...

it is kind of an annoying layout, a good 1/4 of each page is blank because of a wide margin on one side which is used to put a big, gronky, 'THIS WORK IS COPYRIGHTED' bark bark bark, bullshit... (oh, *and* *still* has it at the bottom of EVERY SINGLE page!)

actually wrote the author on that, that it was both insulting and annoying to have a HUGE 'YOU ARE A THIEF' message on EVERY SINGLE PAGE; he just said 'meh'...

guess who i will not be buying any more ebooks from, NO MATTER how useful ? ? ?

for that matter, have the book on my home 'puter as well, but need the portable 'droid version for using as a reference at work...

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Almost forgot, but for authors to make money on the back of their fans they will have to have protections against third party and not be responsible for crap their fans pull off in the markets they create.

Meaning, stop fucking trying to create third party liability it will come back to bite you in the ass in the future.

its even worse than that...

wife goes to the lie bury so much, she has her approx 20 character alphanumeric lie bury id memorized...
*mostly*, she gets dead tree books, but gets ebooks regularly, too...
says they put borrowing limits such that only 2-5 people (depending on how many 'licenses' the lie bury buys) at any given time can 'check them out'.!.!.!

this great moment in pop music brought to you by Empire.
(cue wagnerian theme music, with voiceover of digital combination of clint eastwood and kacey kasem)
Empire: because you have no choice in the matter.

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Thanks for the link there, it provided a nice breakdown on various ebook sale data, and how things like price affect sales.

The most telling quote from it, and the one that is especially important given this article is talking about insane ebook pricing has got to be this:

'It goes without saying that a $.99 book will usually sell more units than a $10+ book. But will the $.99 book make up in volume what the $10+ book earns in margin?

That's the question answered by the Yield Graph. We computed book earnings for all the books in each price band, and then divided the results by the number of books in that band to determine the average yield of for a book priced in each band.

We labeled each bar with a percentage so you know how the yields of each book in that band, on average, compare against against the overall average of all the bands.

So, for example, books priced at $3.99 will earn about 55% more than the average book at any price. Books priced at $1.99 are likely to earn 67% less than the average.'

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"So, for example, books priced at $3.99 will earn about 55% more than the average book at any price"

Interestingly, at current exchange rates that's around £2.50 or €2.95, which is my personal ceiling price for an eBook. I *have* paid more for one in the past, but it's rare. That's also around 50p-£1 less than many popular popular books are sold for as loss leaders in major supermarkets.

I'd have to see a breakdown of the kinds of books being sold at those prices, but if it's established authors who are selling at a price just below the threshold required for people to make impulse buys, it's pretty much what you'd expect.

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to be fair, readerrs are a rather specialized and finite market. i'm inclined to at least provisionally accept the smashwords data regarding the diminishing returns point at which you exhaust the potential pool of buyers.

He further notes that while some wish to blame "piracy" for the problems the industry faces, the real problem is the industry responding incorrectly to that new digital world:

It's not just a matter of a digital world, it's a matter of competing with themselves in a shrinking economy.

I, as well as quite a lot of people I know, are making about the same, and in an increasing trend significantly less, that we did 15-20 years ago. Yet prices continue to rise. A tank of gas a week that cost $15 15-20 years ago now costs closer to $60. $100 food bill 15 years ago, now probably costs an additional $10-15. Utilities have gone up, rent has gone up. If wages stay relatively stagnant, or even decrease, and the costs of necessities continue to rise, that is less money for luxuries.

Now, this is where the competition part comes in. I have close to 28,000 song. over 500 movies, and over 1,000 novels. You're not just competing for my money, but also my time as well. This is especially true of books, given that an increasing amount of them are serial now. I read about 50 pages an hour, so a 300 page book is going to take me about 6 hours to read. I love RA Salvatore and Clive Cussler, to name a few, so I am likely to buy any new Drizzt or Dirk Pitt novels that come out. Given my time is often as limited as my money, and a good portion of that is already going to be tied up in established authors, in addition to quality, you better make it convenient and inexpensive for me to purchase you material. Otherwise I can just pop in my copy of V for Vendetta, even though I've seen it at least 75 times now, or pull out my copy of the original Dragonlance trilogy, which I haven't read in probably a decade now.

And the problem is NOT going to get better, because when my son gets older, all those songs, all those book, all those movies, are going to go to him, and he will probably feel even less inclined than I am to spend a lot of money on such things (why should he when it would take him literally years to read all the books and watch all the movies at his disposal, even if that was all he did).

This is the reality the content industries live in even if they could magically eradicate both digital content and piracy tomorrow. Eventually they may actually understand their biggest problem has actually been their massive success the past several decades, but instead it's more convenient for them to stick their heads in the sand and blame technology.

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Eventually they may actually understand their biggest problem has actually been their massive success the past several decades, but instead it's more convenient for them to stick their heads in the sand and blame technology.

But it was the technology that gave them that success in the first place. Where was the content industry in 1000 AD?

They need to react like Job

(substitute "technology" for "Lord")

"the Lord gave, and the Lord hath taken away; blessed be the name of the Lord."

There are more variables to the equation than simply the lack of publication costs. People with e-readers tend currently towards the high end of the income spectrum. And at least a measurable minority, including myself, are willing to pay just as much or more for an ebook.

I've managed to reduce my book collection from 7000+ to a few hundred, and I absolutely do not want the clutter of another physical book. I don't want to wait for it to be shipped to me, and I don't want to deal with it after I've finished reading it. I strip Amazon's DRM with calibre and keep around 800 books on my Kindle.

So, I'll happily pay equal price or even more for an ebook copy. Multiple times in the last few years, I've forgone reading books that sound interesting because they're not in an ebook format. Blame me, and people like me, if you wish.

Here's a fun fact: I've bought 3 novels this week for 99p from the UK Kindle store. 2 of the books have been on my watch list for at least 2 years (well, I'm a horror fan and this is that time of year for a horror sale, so why not?), but they were always priced too high for me to justify a purchase. Amazon did a special offer, and bang - instant purchase.

This has happened at least 3 other times during the year, where I have been interested in an eBook but not willing to buy at inflated prices (over £5 is *way* too much for an eBook due both to the lack of actual marginal costs they have to cover and due to the first sale and other rights that don't come included) or I simply have too many unread books already to justify another £3.50 purchase. But, drop that price below £2 and I'm usually interested.

You can say whatever you want about this attitude, but it's the same attitude I always had with physical books so it's not going to change. The advantage is that you get my cash directly if you make your prices reasonable, whereas physical publishers didn't get my direct revenue because I often bought used.

Do what you wish publishers, but if your book is over £5, it's going to remain on my wish list. Drop the prices and I'll buy - and I'm very sure I'm not the only one.

I'm in

I recall reading the intro when this first came out last year. While it was a funny premise, I didn't feel like shelling out for $10+ for a full-price book that I might not have time to read. However, pricing it at $0.99 makes it much more compelling, so I just dropped the buck over at Amazon for a copy.

Actually being an ebook makes a HUGE difference to how and when a library can lend out a book.

1) Ebooks don't need to be shipped so interlibrary loans can be instantaneous.

2) With appropriate secondary software nothing prevents returning the ebook whenever one isn't actually reading the book (bookmarks and current location can be restored to any copy of the ebook).

3) Electronic lending is much more convenient than physical lending so many people who would buy their own physical copy may end up being content with borrowing an electronic copy. Especially since pooling books across a large library system (all libraries in the US??) will ensure that books are almost never all checked out.

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If these two conditions obtain a well organized library system that now might need to buy many books that spend most of their time either sitting on the library shelf or sitting in people's bags and on their desks in between reads. That means the library system needs to buy DRASTICALLY less ebooks than it would need to buy physical books.

Of course right now lending isn't that efficient but presumably this future efficiency needs to be taken into account when selling books now. Indeed, a single library copy sold now could, if lending develops in an appropriate direction, offset MANY individual sales in the future.

I'm In

I recall reading the intro when this first came out last year. While it was a funny premise, I didn't feel like shelling out for $10+ for a full-price book that I might not have time to read. However, pricing it at $0.99 makes it much more compelling, so I just dropped the buck over at Amazon for a copy.